Hong Kong moves to weaken its dollar again

Hong Kong's de facto central bank has intervened in the currency market for the second time in a week as the local dollar hit its upper trading limit against the greenback.

The Hong Kong Monetary Authority (HKMA) on Tuesday sold $HK3.91 billion (about $491.46 million) in forex markets, saying the move was necessary to "maintain stability" of the city's unit.

The intervention, on a public holiday, followed a similar move on Friday in New York.

The authority is obliged to act by buying or selling the local dollar whenever it touches either side of the $HK7.75-$HK7.85 trading band against the US dollar, to which it has been pegged for 29 years.

The HKMA told AFP it "will remain closely vigilant of the market developments and act in accordance with the currency board mechanism to maintain the exchange rate stability of the Hong Kong dollar".

The authority sold local dollars worth $US603 million ($586.83 million) on Friday to curb the local unit's rise, which it said had been fuelled by weeks of capital inflows from overseas.

The US Federal Reserve's monetary easing has also weakened the greenback.